{"id":4915,"date":"2022-11-03T12:20:10","date_gmt":"2022-11-03T12:20:10","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=4915"},"modified":"2022-11-03T12:20:13","modified_gmt":"2022-11-03T12:20:13","slug":"avoiding-obstacles-with-the-construction-industry-scheme","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/avoiding-obstacles-with-the-construction-industry-scheme\/","title":{"rendered":"Avoiding obstacles with the Construction Industry Scheme"},"content":{"rendered":"<p>Under the Construction Industry Scheme (CIS),\u00a0contractors take money from a subcontractor&#8217;s payments and send it to HM Revenue and Customs (HMRC).<\/p>\n<p><!--more--><\/p>\n<p>Are you up to speed with everything you need to know?<\/p>\n<p>Some key terms include:<\/p>\n<p><strong>Construction operations<\/strong><\/p>\n<p>These are the services the scheme relates to, such as work to permanent or temporary buildings, structures, or associated land.<\/p>\n<p><strong>Construction contract<\/strong><\/p>\n<p>This is a legal agreement, where one person provides construction services to another.<\/p>\n<p><strong>Contract payment<\/strong><\/p>\n<p>This refers to fees paid by a contractor to a subcontractor, or other party, under a construction contract.<\/p>\n<p>The payments can be in the form of cash, cheque, or credit. Some payments are excluded from this, such as:<\/p>\n<ul>\n<li>Payments made under a contract of employment under the labour \u2018agency\u2019 obligations<\/li>\n<li>Payments obtained for the services of an individual, and where the off-payroll working rules apply.<\/li>\n<\/ul>\n<p><strong>Deduction<\/strong><\/p>\n<p>This is the sum of tax that a contractor must pay to HMRC from a contract payment.<\/p>\n<p>The deduction will either be at the standard rate of 20 per cent or at the higher rate of 30 per cent.<\/p>\n<p><strong>The scope of the CIS<\/strong><\/p>\n<p>HMRC handle overseas contractors and subcontractors in the same way as their UK counterparts.<\/p>\n<p>If a construction project is carried out in the UK, the CIS will possibly need to be utilised.<\/p>\n<p><strong>Common pitfalls<\/strong><\/p>\n<p>Some of the most common issues faced in relation to the CIS include but are not limited to:<\/p>\n<ul>\n<li>Not registering for and applying the CIS at the right time<\/li>\n<li>Not recognising when the contractor threshold is surpassed<\/li>\n<li>Failing to notice that a subcontractor is conducting construction operations<\/li>\n<li>Not using the correct CIS tax deduction rate<\/li>\n<li>Not considering employment status, employment mediators and \u2018IR35\u2019 requirements.<\/li>\n<\/ul>\n<p><strong>What must you do?<\/strong><\/p>\n<p>Subcontractors with gross payment status must stay compliant in order not to lose that status, which will ultimately have a severe impact on the business.<\/p>\n<p>Additionally, errors by contractors can be expensive, as they can be held liable for CIS tax under deducted contract payments to subcontractors.<\/p>\n<p>HMRC can reclaim that CIS tax for up to six years, along with interest charges and penalties.<\/p>\n<p><strong>It\u2019s vital that you seek professional help and advice when dealing with matters such as the above. Contact us today.<\/strong><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Under the Construction Industry Scheme (CIS),\u00a0contractors take money from a subcontractor&#8217;s payments and send it to HM Revenue and Customs (HMRC).<\/p>\n","protected":false},"author":2,"featured_media":4917,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,30,25],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4915"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=4915"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4915\/revisions"}],"predecessor-version":[{"id":4916,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/4915\/revisions\/4916"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/4917"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=4915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=4915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=4915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}